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[IMAGE] Now you have the power to open up data in new ways to more users: Itron introduces the industry's first open platform to provide direct access to critical C_customer usage data. A user-friendly Universal Calculation Engine and third party application development environment extend the value of your MV-90 investment. Learn more about the new MV-90 ENTERPRISE EDITION information exchange server when you visit with us at the CIS Conference. Visit us at www.itron.com [IMAGE] Are you looking to invest in, attract investors for, provide services to or understand the business and technology dynamics of the hottest companies emerging in the energy sector? Attend the Energy Venture Fair, June 25 & 26, 2001, in Boston, MA and hear CEOs from 75 hot energy companies present their business plans. Complete event description available at www.energyventurefair.com or call Nannette Mooney at (818) 888-4445, ext. 11. [IMAGE] "Global Power & Western U.S. Coal: Domino Factors at Play in Today's Energy Markets" is the theme of the 2001 Spring Pacific Coal Forum (Coal Forum'2001) to be hosted by the Western Coal Council, June 4-6, 2001 in Park City, Utah. Keynote Speakers include: Honorable Mike Leavitt, Governor, State of Utah; Hitoshi Tagawa, Tokyo Electric Power Company; Eng. Jesus Buentello, Comision Federal de Electricidad; Malcolm Thomas, Kennecott Energy Company; Manfred Raschke, International Strategic Information Services (ISIS). Contact Janet Gellici at (303) 431-1456 or info@westcoal.org www.westerncoalcouncil.org. Correction to 5/14/01 IssueAlert The chairman of the Public Utility Commission of Texas is Pat Wood III, not Carl Wood as stated. Pat Wood III has been nominated for a position with FERC. [IMAGE] [IMAGE] May 15, 2001 Bright Skies Ahead for Solar Power? By Will McNamara Director, Electric Industry Analysis [IMAGE]Shares in companies that make alternative energy technologies have climbed as a result of California's latest round of statewide blackouts. Shares in solar power producing companies in particular have embarked on a recent increase. For instance, Evergreen Solar (Nasdaq: ESLR) recently jumped up about 6.8 percent, to be currently priced at $10.35 (representing an annual increase of 76 percent). Evergreen's main competitor AstroPower (Nasdaq: APWR) gained about 4.2 percent and is currently priced at $45.16 (representing an annual increase of 55 percent). According to a report in Reuters, James Logerfo, an analyst with Bank of America Montgomery, concluded that the increase is "speculative buying across the energy industry. Some are buying without appreciating how far away these companies are from having real products and some are building for a trade this summer. They are not buying to hold the stocks for five years, but for five months or five weeks." Analysis: Regardless of the prospectus for solar power stocks, it certainly appears that solar power in general is finding a new niche as a direct result of compromised supplies of more traditional fuel sources such as natural gas. Renewed interest from investors in solar power is probably a direct result of concerns about existing power supply in a handful of Western states. However, at the same time, solar power companies such as Evergreen Solar and AstroPower also are turning in strong profits for 1Q 2001, which represents a positive turnaround for both companies. The combination of strong investor interest and an upswing in profits indicates that solar power could be embarking on a market boom that up to only a few years ago was seen as very unlikely. The question is whether the turnaround will be temporary, or if solar power companies truly have found a permanent "place in the sun." Companies involved in solar energy typically have a business model that is founded on the technology of photovoltaics, which is basically the process of absorbing photons from the sun or other light sources and turning them into electrons. According to recent reports, demand for solar cells grew by 40 percent in 2000. Questions about the reliability of power supply provided by traditional utilities that have been sparked by the California situation presumably will only result in greater interest. Consequently, those companies that have been on the forefront of solar power research and development for years are now starting to reap the benefits of their efforts. Recent financial reports seem to support this theory. For instance, Evergreen Solar-which develops, manufactures and markets solar power products based on its patented String Ribbon technology-reported product revenues of $146,000, an increase of 535 percent when compared to revenues of $23,000 for the same period in 2000. Granted, the company absorbed a net loss for 1Q 2001 of $2.4 million, as compared with a net loss of $664,000 for 1Q 2000. However, Evergreen remains pleased by its most recent financial performance, which it attributes to geographic diversification and growing market opportunities for solar power. The company's sales since 1997 have been composed primarily of solar panels. Evergreen plans to begin large-scale manufacturing of its solar power products in a new manufacturing facility this year. Evergreen's principal objective is to become a leading producer of high-quality solar power products, primarily for the on-grid market and the off-grid rural electrification market. What makes the company unique, according to Evergreen, is its String Ribbon technology, which reportedly avoids the slicing of a solid block of silicon, which is required for most solar-power technologies. Evergreen's String Ribbon technology reportedly cuts the use of silicon in half, which reduces manufacturing costs without impairing product reliability. As noted, AstroPower-which develops, manufacturers and markets PV solar cells, modules, panels, and systems-also reported a strong first quarter. Total revenues for AstroPower were $14,304,000, an increase of 37.5 percent from 1Q 2000. Product revenues were $13,581,000, an increase of 40.4 percent from the same period in the previous year. AstroPower is reporting continued strong performance for the company, and in fact has stated that it has far more sales opportunities than it can supply. There are other companies besides the two I've mentioned that are actively involved in solar power (for instance, Amonix, BP Solar and United Solar, to name a few). However, the suddenly strong performance of both Evergreen Solar and Active Power-after previous quarters, and even decades, of financial losses-indicates that market opportunities have opened up considerably for companies involved in solar power development and marketing. So, what explains the sudden resurgence of solar power, which last experienced any significantly widespread interest in the late 1970s? I think there are several factors driving this renewed interest. The California impact is obvious, as the state's energy crisis has shaken many Americans into a new awareness about a national energy crisis. However, I think the explanation goes deeper than that. In addition to the California impact, natural-gas prices are now at such a high level that alternatives such as solar power, which were previously perceived as cost prohibitive, now are becoming cost-competitive. In addition, many states and the federal government are providing tax incentives for businesses that employ solar electric systems, which is making solar panels appealing to a mass market. California reportedly pays one-half of the costs associated with a solar electric system that a business establishes; Illinois and Maryland are implementing similar credits. The federal government also provides a 10-percent commercial solar tax credit to businesses that employ a solar system, and those businesses are also eligible for a five-year, accelerated depreciated tax reduction. Personal energy credits related to solar power were repealed in the early 1980s, but some states like California are implementing "net metering" policies that make it easier for residential customers to install renewables-based generation (solar and wind) at their homes. In any case, solar power is becoming more financially feasible for businesses, which is an important factor considering that most solar systems still cost between $5,000 and $20,000. However, despite this renewed interest and projected growth, the American public as a whole is still rather leery about solar power. This is a sharp contrast to foreign countries, especially where interconnecting to power grids is cumbersome. In fact, more than three-quarters of the photovoltaic cells produced in the United States are sold abroad, and foreign production of solar panels internationally has increased 39 percent while U.S. production has increased by 29 percent. There are several reasons driving the general reluctance toward this alternative form of power in this country. First, many still believe that solar power is not (and will not become) competitive with more conventional sources of electricity, such as natural gas or coal. As has been often repeated, although the sun is free the devices used to capture it are expensive. This has kept many end-users, utilities and independent power producers tied to their more traditional fuel sources. Another reason is that many homeowners and building associations across the country are not receptive to solar power, which serves as a deterrent for potential customers that may want to use the sun to power new projects. A third reason is that, in most areas of the country, the sun (like the wind) is an intermittent fuel source, and battery systems that are often expensive must be used to store the power from the sun. The other drawback to solar power is the lack of priority it has received from the Bush administration. In April, President Bush proposed cutting more than $200 million from the federal renewable energy and efficiency research programs, which support funding for solar power and other renewable projects. The budget will still provide about $186 million to solar, wind and other renewable projects (down from current spending levels of $376 million). However, the cuts have been perceived by many as a lack of support for renewable projects by the new administration. In fairness to President Bush, his energy task force, which is scheduled to release its energy plan this week, has a potential energy crisis to solve and is focused on immediate solutions. Nevertheless, apart from the Bush administration's energy plan, by all appearances solar power appears to be on the brink of new market interest. How extensive this renewed interest will become, and to what extent solar power will emerge as a viable power source alternative across the national mass market, remain to be seen. Also, as noted in the report from Reuters, investors may be demonstrating only temporary interest in solar power, in anticipation of ongoing power shortages this summer. However, given the high prices of natural gas, concerns about emissions from coal and ongoing public resistance to nuclear energy, more than any other time in the last two decades solar power's future looks pretty bright. An archive list of previous IssueAlerts is available at www.scientech.com [IMAGE] The most comprehensive, up-to-date map of the North American Power System by RDI/FT Energy is now available from SCIENTECH. Reach thousands of utility analysts and decision makers every day. Your company can schedule a sponsorship of IssueAlert by contacting Nancy Spring via e-mail or calling (505)244-7613. Advertising opportunities are also available on our website. SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let us know if we can help you with in-depth analyses or any other SCIENTECH information products. If you would like to refer a colleague to receive our free, daily IssueAlerts, please reply to this email and include their full name and email address or register directly on our site. If you no longer wish to receive this daily email, send a message to IssueAlert, and include the word "delete" in the subject line. SCIENTECH's IssueAlerts(SM) are compiled based on the independent analysis of SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts are not intended to predict financial performance of companies discussed, or to be the basis for investment decisions of any kind. SCIENTECH's sole purpose in publishing its IssueAlerts is to offer an independent perspective regarding the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy issues. Copyright 2001. SCIENTECH, Inc. All rights reserved.
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